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SAA hopes to save R700m by retrenching 1,000 workers

SAA wants to save R700 million through retrenchments.
SAA wants to save R700 million through retrenchments.

South Africa’s struggling state-owned airline South African Airways (SAA) could cut more than 900 jobs as it restructures to stem severe financial losses, it said in a statement.

SAA said it had started consultations with its more than 5,000 staff and was talking to labour unions.

At a media briefing later on Tuesday, SAA said the restructuring plan will be finalised by March next year and should save the firm R700 million.

“If you look at the 944 employees (who could lose their jobs), it’s estimated, depending on how the process pans out, it could save the company about R700 million,” said Martin Kemp, chief executive of South African Airways unit Air Chefs.

He did not clarify whether the amount would be a recurring or one-time saving. The airline has not made an annual profit since 2011 and is grappling with a funding gap of R21.7 billion rand on top of an ageing fleet of airplanes.

South African officials have been searching for an investor to take a stake in the airline, but their efforts have so far been unsuccessful.

The plan to sell to a private investor also faces opposition from the large trade unions that largely supported President Cyril Ramaphosa’s campaign for the ruling party’s presidency in 2017, which paved his path to the top job.

“Our communication to labour and employees is to have this process finalised by the end of March next year,” SAA’s Kemp said.

Unions have already rejected Ramaphosa’s plan to split and trim down state firm Eskom, which is also set start restructuring in 2020. The SAA plan is likely to face the same fate amid record levels of unemployment and economic growth barely topping 1%.